What is an Investment Bond?

[Kathyan]

My husband has signed to be a trustee for an Investment Bond set up by a solicitor on behalf of his Mum. Can anyone tell me what it means please? Thanks.

[dzug]

An investment bond is just a way of investing money. The institution that is issuing the bond makes certain promises (which make it a bond) with regard either to income payments or to capital repayments (or both) at certain times or if certain events happen.

The advantage of such a bond in a trust is that it can remove the sum in it from your Mum's estate and thereby avoid inheritance tax. The trust owns the bond, not your Mum, but she benefits from it in whatever way its terms specify or the trustees decide. The trust document should specify their powers in relation to it.